As Expected Crypto Scams are Multiplying

[Jim Koepke]

Warren Buffet is often quoted as only investing in things he understands so he can explain his mistakes.

Cryptocurrencies is one of those things that I do not understand. It sounds like some kind of strange scheme to me.

If $1,000 is stashed under my mattress, it remains $1,000 until it is removed. For some fantastic reasoning if $1,000 is stashed under an "electronic mattress in the cloud," people can get rich. It doesn't make sense to me.

Of course now the scammers have figured out ways to drain these magical electronic wallets.

One article > https://www.washingtonpost.com/techn...uidity-mining/

Short quote:

The scam that ensnared (name removed) unfolded on an app made by the cryptocurrency exchange Coinbase. It involved a niche crypto area known as “liquidity mining” and took the form of what activists have come to call “pig-butchering” — because the victim’s wallet is fattened before the slaughter.

A search on > cryptocurrency scams rampant < shows there are a lot of sources for information on the subject.

To me it makes more sense to buy old tools cheap, use them and then sell for a profit if a little cash is needed makes better sense. Besides, it is harder for someone to walk off with a ton of cast iron than it is an electronic wallet.

Another thing, thieves do not like work. Sitting at a computer screen in one's underwear is less work than trying to steal and sell a ton of tools.

jtk

[Lisa Starr]

Yep...I don't understand cryptocurrancies, and don't want to. I agree that most thieves are lazy. If it takes much work, they'll go elsewhere.

[mike stenson]

It's no different than any other speculation. People are just all into cryptocurrency currently because it's valuation has exploded in the past few years. To be honest, it's just as real.. as stocks are.

[Andrew More]

Crypto currencies are simple, they're the electronic equivalent of all the bank issued currencies of the 19th century in electronic form. As for their value, I've yet to hear a solid explanation for one value over another. Why should BTC be worth $5, $500, or $50,000? I don't know.

As for people "investing" in them, I think it's mostly speculation driven by understandable concerns about the way that money has been handled by the Fed and other central banks around the world. However for most people the line goes up, and that's enough.

I disagree with the assertion that another form of money has any relation to stocks. It's true that you can speculate with both, and people do, however stocks represent ownership of a real(er) thing, which is to say a company. This give the stockholder a claim on the growth and value of that company as it grows. It also provides a means of raising capital for businesses. When money goes into crypto, where does it go? It's a zero sum game in a way that investing in companies which can grow and generate a return is not.

Also I think we need to differentiate between blockchain, and crypto. Crypto currencies are one application of block chain. Block chain is an interesting solution to the problem of how to do you have a distributed ledger where you can't trust all the parties involved. I could definitely see some of the banking systems, like SWIFT moving to a block chain approach in the future, but that doesn't mean that crypto has any value.

Also it's important to understand that the most popular crypto currencies are deliberately deflationary, which creates an incentive to NOT spend them and NOT invest them.

One other important difference between crypto and stocks is the complete and utter lack of transparency or enforcement. While the SEC is mostly toothless, and fraud still occurs in the stock market, it is NOT as common or as easily perpetuated as it is in the unregulated and unreported crypto currency space. One of the results in that all the old, nasty cons that used to be done in stocks before the SEC are now being done in crypto.

[mike stenson]

Money, in general, only has the value that is attributed to it. Just like stocks. Don't believe me? Look at the value of the Mark during the Weimar Republic. It's the goods and services that have actual value.

[Edward Weber]

Is it a scam because I don't understand it
OR
I don't understand it because it's a scam?

I heard a comedian say the other day, "if I already have money, why do I need to turn it into a different kind of money"?

[Mel Fulks]

USA money is just paper ,redeemable only by more paper. The plastic crypto is much tougher and can be used to play checkers.

[Ron Citerone]

I'm sure crypto has made many rich and many poor with it's volitiity, I suppose I won't be rich and I hope I won't be poor, I am steering clear of it. I feel fairly confident that I will run out of time before money. All is well in Ronworld.

[Andrew More]

Money, in general, only has the value that is attributed to it. Just like stocks. It's the goods and services that have actual value.

Right I think there's a difference between the value of a stock and it's price, just like there's a difference between the value of a jointer, and what you might have paid for it on craigslist. I don't think there is such a claim for various tokens, particularly when the price of them fluctuates based on changes in the margins. You cannot make the same claim about stocks because they are a claim on the ownership of a company, which has real assets and the ability to produce things of value.

USA money is just paper ,redeemable only by more paper.

Not exactly. It's required that you have US Dollars to pay your taxes. Further that dollar has value in other places when people agree to repay loans in dollars. Finally dollars are exchangable for oil (and until recently that the the only way to pay for it).

[dennis thompson]

It's no different than any other speculation. People are just all into cryptocurrency currently because it's valuation has exploded in the past few years. To be honest, it's just as real.. as stocks are.

I can’t agree with that. With stocks you can look at balance sheets, income statements , cash flow, The products sold, market shares, I could go on but you get the picture. I don’t think there is any way of analyzing crypto currencies.

[Bill Dufour]

One problem with crypto is it does not exist so if it gets stolen the cops do not care. One account got robbed by a frauduelnt transaction. Rather then let him lose the money the bank took money from everyones account to repay him some of the loss. Like if your safe deposit box got robbed the bank will take some from each box to repay you wouldn't they?
Bill D.

[Edwin Santos]

I can’t agree with that. With stocks you can look at balance sheets, income statements , cash flow, The products sold, market shares, I could go on but you get the picture. I don’t think there is any way of analyzing crypto currencies.

Just one person's opinion here, but I think of crypto less like a stock, and more like a traded speculative commodity. Like gold, precious metals, collectibles, beanie babies. Crypto is traded in active markets making it more liquid than collectibles like Art. But I consider it a purely speculative item where what it is worth is based purely on what someone else will pay you for it. I've never understood why they call them crypto "currencies". It seems hard for me to imagine a day when you can use any of them as a medium of exchange for routine transactions, but the vision of the crypto believers is that such a day will come.
For now though, it's a speculative market, and there is no telling what any crypto token type will be worth on any day. I wouldn't be too quick to bash them as a scam because with a market cap of over $1 Trillion now, there is obviously a market that's here to stay

Warren Buffett's objection is completely understandable. He plays a different game entirely as a value investor with very traditional criteria. But then that outlook kept Buffett away from pretty much all tech stocks until only very recently which means he did not participate in the single biggest driver of US GDP of the past 20 years. He took positions in Apple and to a smaller degree Amazon, only in recent years and has done very well with both. Can you imagine what Buffett's record would be if he had been willing to be an early investor in say, Microsoft, Apple, Google, Amazon or Facebook? Yes his discipline has paid him well but there is an opportunity cost implicit in shunning emerging technology and concepts because you don't "understand" them. 20 years ago I would not have understood the world I live in today, but here I am.

FYI, one of the best investments over the past 2-3 years has been collectible sports cards. The returns have been staggering and the market has exploded. Real Sports on HBO did a fascinating segment about it. That's like crypto except on a much smaller scale. A sports card does not have a balance sheet, or any hard assets associated with it. Warren Buffett would never touch one as an investment. Yet there are people who actively trade in them and pay a lot of money to buy them and often times sell them for much much more.

Just some rambling $.02
or .00000023 BTC

[Mel Fulks]

Gold is wheeled around into different rooms of Fort Knox to settle debts. It’s heavy stuff …but they refuse to go to light weight , fashionable
paper !

[Andrew More]

Can you imagine what Buffett's record would be if he had been willing to be an early investor in say, Microsoft, Apple, Google, Amazon or Facebook?

I think Buffet's comment has always been more about understanding to the point of having an edge over other investors. I mean he could have invested in Amazon in '99 and had a decade (or two?) of terrible performance. Or he could have owned Intel or Cisco during that same period and never recovered his losses.

Since he has a decent relationship with Bill Gates his reluctance to invest in Microsoft is more puzzling to me, but MSFT has not been without it's challenging periods as well.

He's also had some bad ideas, including investing in airlines, despite knowing better.

[Kev Williams]

Want to REALLY not understand crypto? or Bitcoin at least? I saw this when it aired, and neither I nor Dr. Phil learned a thing